Mystery share buying in Gippsland Basin of oil and gas producer Anzon; logical that rival Tap Oil might be buyer of the stake, but unlikely

According to Anthony Hughes, the mystery share buying in Gippsland Basin oil and gas producer Anzon Australia continued on 21 September, and at least one sizeable parcel was traded in what is usually an illiquid stock (particularly given 53 per cent of the company is owned by the UK-listed Anzon Energy), reported the The Australian Financial Review (22/9/2007, p. 46).

Anzon entertaining offers for the company: As mentioned, Anzon is running a process whereby it too is entertaining offers for the company, but given the potential for consolidation in the local oil and gas sector there are potentially quite a lot of parties that could show an interest. Indeed, about 15 parties were on the long list, which has been narrowed down to four or five – about as many as the data room could handle.

Standstill agreement prevents “insiders” from buying stock: The buyer of the stake can’t be one of these parties because now that the data room is opened they are deemed “insiders” and the privilege of entering the data room requires the parties to sign a standstill agreement preventing them from buying stock as well. That means the buyer of the stake on-market is probably one of the parties unhappy that they have been cut from the process – probably because they didn’t give a high enough indicative bid.

Tap Oil unlikely to be buyer of the stake: While it sounds logical that a rival such as Tap Oil might be the buyer of the stake, given it has $100 million in cash and is under pressure to spend it, that seems unlikely. For a start, Tap Oil chairman Neale Taylor knows Anzon boss Stephen Koroknay quite well, given they both used to work at Esso. There seems a good chance that Anzon will change hands at more than $2 a share, particularly if the oil price holds up.